In the three years since Paul Pluschkell founded Spigit, he has racked up an impressive client list. Based in Pleasanton, California, Spigit sells social networking software that collects and sorts employee suggestions. Pluschkell charges as much as $1 million a year, and his clients include Pfizer, Southwest Airlines, and Cisco.

So Pluschkell was understandably dubious last year when he took a call from a young man with a Texas twang who introduced himself as Dustin Haisler, chief information officer of Manor, Texas. "I'd lived in Texas for two years, and I'd never heard of Manor," Pluschkell says. "We weren't focused on selling to governments at all."

It didn't take long for Haisler, 23, to convince Pluschkell of the merits of doing business with his small town. Manor (pronounced MAY-ner) may have just 6,500 residents - the chief tourist attraction is the water tower from the 1993 film What's Eating Gilbert Grape - but Haisler's zest for all things high tech has made it ground zero for a nascent industry called Gov 2.0.

Think of Gov 2.0 as an attempt to bring the virtues of the Web to government. Federal, state, and local agencies are in possession of vast troves of data, potential gold mines for creative Web entrepreneurs. At the same time, the effects of the recession have pushed some cities to look to social networks and cell-phone apps to cut costs. "Governments have had this flawed view that new technologies cost more," Haisler says. "We're giving our citizens access to stuff that we would have never thought possible."

The Gov 2.0 industry is still small, but the Obama administration and a few cities have encouraged entrepreneurs to develop software using digitized government data. In San Francisco, iBart Live, a $3.99 iPhone app, taps into the city's transit system to give times of train arrivals. In New York City, the Big Apple Ed website lets residents compare public schools by metrics such as test scores and teacher qualifications.

But no city official has embraced Gov 2.0 with quite the fervor of Manor's Haisler, who sees it as a way to stretch the city's $107,000 annual tech budget. "The city is a hub for pretty much every civic application out there," says Ben Berkowitz, the CEO of SeeClickFix, a New Haven, Connecticut, start-up that offers an app to report maintenance issues, such as potholes and broken streetlights. Manor pays $1,200 a year for the service and was one of the company's first customers.

Manor has agreements with more than a dozen other small companies for various high-tech services, many of which, as a pilot customer, it receives for free. Spigit's contribution was a Web portal called Manor Labs, which asks residents to make suggestions and then vote for the best. (Two ideas under consideration: a ban on texting while driving and a plan to recruit a major supermarket chain.) Winning ideas receive points redeemable for prizes, such as a gift certificate at a local restaurant or being named mayor of Manor for a day.

So far, Spigit's suggestion box has been visited by some 2,000 Manorites - compared with the 15 or so who usually turn up for council meetings.

Pluschkell was happy to build Manor Labs for free and forgo the $5,000 monthly fee for a year. "Manor has given us a footprint in this market," says Pluschkell. Thanks to success in Manor, he recently won a paid contract with Harford County, Maryland, and has bids pending with 50 cities and federal organizations. Pluschkell expects such work will produce 20 percent of the company's revenue by 2012. "Gov 2.0," he says, "is easily a billion-dollar market."

CiviGuard, Mountain View, California
The company sells a high-tech version of the old emergency broadcast system. Alerts are distributed through smartphone apps and text messages.

Spigit, Pleasanton, California
The company's signature product is an online suggestion box. Manorites whose ideas are implemented win prizes. Thanks to one winner, residents can set up automatic utility-bill payments.

DotGov, Seattle
It is developing an iPhone app called CityLife to provide information on local government services. The app hasn't yet been released, but Manor has been helping to test it out.

SeeClickFix, New Haven, Connecticut
It offers a website, an 800 number, and an iPhone app that let Manorites report potholes, broken streetlights, and other problems to the Department of Public Works.